How to get the most out of your insolvency compliance review

Purpose of the insolvency review
Since January 2005, ICAEW has required all its licence holders to conduct an annual insolvency compliance review (ICR). The requirement is in regulation 3.13 of our Insolvency Licensing Regulations and Guidance Notes. It provides that a licence holder must review and record, at least once a year, the effectiveness of his own and/or his firm’s quality control procedures and compliance with the regulations.

IPs in multi-office firms can carry out reviews on a rolling programme, although we wouldn’t expect this cycle to exceed three years. And we would expect the firms’ risk teams to disseminate the findings from the reviews that have been undertaken in a particular year to all our IPs in the firm.

A good ICR is a useful tool to ensure that documentation is up to date and that systems are working effectively. In our experience, those reviews that don’t highlight any issues are rarely robust.

Help with the ICR - our helpsheets and resources

QAD reviewers see ICRs on all monitoring visits and have considerable experience of what makes a good review, and what doesn’t. To share good practice, and help avoid some of the difficulties we see, we have updated and expanded our helpsheets.

Our updated Insolvency Compliance Review helpsheet gives guidance on who should conduct your ICR, how to decide what cases to look at and how you should document and record the review. It provides good starting point when planning your next ICR.

IPs often ask us if they have to use an external compliance provider. We do not routinely require IPs to use an external compliance consultant and some IPs successfully manage their own compliance. But many IPs like to have regular external input; others prefer to have external input from time to time, carrying out their own internal reviews in the meantime. If you are thinking about using an external consultant, take a look at our helpsheet Using an insolvency compliance consultant, which highlights some important areas to consider before engaging an external reviewer.

Do I need to give my ICR provider a copy of my last QAD report? Can a manager who is currently studying for the JIEB carry out my ICR? Do routine case reviews count as an ICR? These are just some of the questions we are often asked. The answers to these, and other questions that often crop up are covered in our helpsheet, Annual Insolvency Compliance reviews FAQs. All these helpsheets are available on our website.

To provide additional support to our licence holders in this key area, Kate Collyer, a consultant with QAD, will be presenting the following free webinar:

A final thought

But doing a good, thorough ICR is only part of the picture. It’s very important that you address any changes required and that any new systems work effectively. Steve Wood, chairman of our Insolvency Licensing Committee, discussed ICRs in his article in December, and we echo his closing comment, that however you do your review, make sure that you act on the findings.